Some clever people came up with an opaque monetary betting system called CDO’s etc. These were rated AAA by some other even more clever people.

Due to a lot of surplus cash, European Banks (and others) invested in these financial documents – one or two of merit the balance not even of junk grade.

Once the curtain came down, the tax payers of Europe were called upon via the incumbent politicians to bail the banks out so as to protect the local economies. The ask was a big ask, and in many cases not very successful as the real depth of the problem to longer to uncover, than the unravelling of the origins of the bad financial .

Would it not make more sense to go back to the originators of the problem, those that benefited from it and have the proceeds claimed back from them. That should be done in a fully transparent way perhaps by asset seizure as is now being done in Cyprus. It would be enlightening to see all the greedy ones who profited at the expense of others. But at the same time, those jumping on the greed band wagon can expect no compensation. When it looks too good to be true then there lurks danger. This second group of people knew of the danger, otherwise they would have behaved in a safer manner as the majority did.

In the tidy up, there is a need to change a few other things as well. Lenders need reins on them so that they are never again able to gamble with depositor’s money. In earlier time a deposit was put down to purchase any financed items. In banking parlance that deposit is the risk money.
The buyer makes the decision and must have a good amount of ownership in it otherwise, the decision will be less sound than it would be with the risk money as the first resort.

Another change necessary, career politicians – in power in nearly every country need to be kicked into touch, and a maximum two terms only be allowed. The fat cat perks should also go. They would then that their behaviour was in the countries interest and not in their own career.

]]>Comment on Cyprus Shows Trust in ECB is Misplaced by Spartanhttp://economistmeg.com/2013/03/26/cyprus-shows-trust-in-ecb-is-misplaced/#comment-6009
Sun, 31 Mar 2013 03:14:03 +0000http://economistmeg.com/?p=2013#comment-6009I do agree that these capital controls and the taking of deposits is a serious limitation that indicates a look alike “eminent domain” principle. It is wrong, unlawful and unfair for the depositors. The main issue, however, is why the banks had no funds? Are really the deposits there? Any accounting? To me , it looks like the “old Wild West.”
]]>Comment on What happens to Portugal and Ireland if Greece reprofiles/restructures? by Megan Greenehttp://economistmeg.com/2011/06/13/what-happens-to-portugal-and-ireland-if-greece-reprofilesrestructures/#comment-5996
Tue, 26 Mar 2013 15:22:54 +0000http://economistmeg.com/?p=1361#comment-5996Hi, you can click subscribe on the right hand side of the home page to get blog posts emailed to you as they are published.
]]>Comment on Cyprus Shows Trust in ECB is Misplaced by Pavloshttp://economistmeg.com/2013/03/26/cyprus-shows-trust-in-ecb-is-misplaced/#comment-5994
Tue, 26 Mar 2013 14:28:22 +0000http://economistmeg.com/?p=2013#comment-5994Agreed. Moreover, a euro of deposit (M1) in any bank has to be the same as in any other EZ bank. Otherwise, we either don’t have a single currency or we don’t have a banking system. In fact what we have is a single M0 but an opaque system of balkanized M1 pseudocurrencies, where banks in different regions are subject to different and unpredictable liquidity and risk premia. When a nominal amount is transferred across a risk boundary, say Greece to France or vice versa, it appreciates entering the low-risk region and depreciates going out.

This is hugely unjust and dysfunctional. The problem is basic, and has to be solved either by guaranteeing M0-M1 partity unconditionally arcoss the zone or by reintroducing exchange rates on M1. I don’t know if it would be practical to keep a unified M0, for the convenience of travellers and trade, but formally break the union for M1 and let deposits be locally denominated and float.

]]>Comment on Cyprus Shows Trust in ECB is Misplaced by Michael Gausshttp://economistmeg.com/2013/03/26/cyprus-shows-trust-in-ecb-is-misplaced/#comment-5988
Tue, 26 Mar 2013 03:48:44 +0000http://economistmeg.com/?p=2013#comment-5988Megan, just how lax were the Cypriot bank regulations in the first place? How easy was it to open an account? Were there any checks on large money movements like in the US?
]]>Comment on Cyprus’ Four Options for Avoiding Collapse by Mark Allanhttp://economistmeg.com/2013/03/20/cyprus-four-options-for-avoiding-collapse/#comment-5968
Sat, 23 Mar 2013 11:43:48 +0000http://economistmeg.com/?p=2004#comment-5968Isn’t it ironic that only a few months ago there was talk of the euro crisis being solved!
Those of us who read this blog can allow ourselves a wry smile. This situation is going to get a lot worse before it gets better.
I believe the best thing Cyprus can do is do an Iceland and extricate themselves from the mess this way.
Otherwise it’s the same old useless methods of cuts and austerity that demolish morale,create disenchantment and most of all severely curtail growth. Making the ability to pay back the loans nigh on impossible.
It won’t happen,they’ll do as the troika tells them and so the misery perpetuates.
]]>Comment on Cyprus’ Four Options for Avoiding Collapse by La nouvelle resistancehttp://economistmeg.com/2013/03/20/cyprus-four-options-for-avoiding-collapse/#comment-5967
Sat, 23 Mar 2013 03:32:38 +0000http://economistmeg.com/?p=2004#comment-5967We, the citizens, refuse to allocate our own funds in any form to bailout the gambling debts incurred through the financial speculation of investment banks.

]]>Comment on To Get a Bailout, Cyprus Needs to Launder Its Reputation by Spartanhttp://economistmeg.com/2013/02/04/to-get-a-bailout-cyprus-needs-to-launder-its-reputation/#comment-5941
Tue, 19 Mar 2013 03:06:18 +0000http://economistmeg.com/?p=1976#comment-5941The levy on deposits was predicted here!
]]>Comment on Greece May Get Cruel Reward For Its Success by Spartanhttp://economistmeg.com/2013/02/18/greece-may-get-cruel-reward-for-its-success/#comment-5940
Tue, 19 Mar 2013 02:50:24 +0000http://economistmeg.com/?p=1985#comment-5940Finally! It is revealed that Greece never owed any money! Instead , Greece has been and continue to be robbed!
]]>Comment on Spanish bailout inevitable, but not necessarily imminent by test sitehttp://economistmeg.com/2012/07/25/spanish-bailout-inevitable-but-not-necessarily-imminent/#comment-5898
Fri, 15 Mar 2013 13:36:26 +0000http://economistmeg.com/?p=1915#comment-5898I think this site contains some real superb info for everyone . “Morality, like art, means a drawing a line someplace.” by Oscar Wilde.
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